I bond rate prediction reddit. I bonds earn a combined rate of interest.

I bond rate prediction reddit We list interest rates for all I bonds ever issued in There's two parts to the rate. In TreasuryDirect, my Current Holdings continued to show $10K for three months until it showed $10,060. The new principal is the sum of the prior principal and the interest earned in the previous 6 months. At least I would not bet on it with a 20 year bond New inflation numbers were just announced at BLS. If rates go down, locking in the high rate in a bond was a good move. The current inflation rate is 4. It’s all based on the variable rate. I'm just curious if any Bogleheads consider them a worthwhile For example, the decade-long, useful prediction for the I Bond’s fixed rate (0. gov comments sorted by Best Top New Controversial Q&A Add a Comment For mortgage rates to return to the record-low levels we saw in 2021, the economy would have to take a significant downturn, forcing the Fed to make aggressive policy moves: cutting the federal funds rate close to zero and resuming its purchase of government-backed bonds and mortgage-backed securities. 50%, then you would still get 7. I purchased bonds with an issue date of 4/1/2022, which were at the then-rate of 7. YTM is essentially a bond's internal rate of return if held to maturity. CIBC also provides commentary that it believes the market is too aggressive with its expectations, and believes the BoC will more New I bonds have a fixed rate of 0. 26% from 1914 to 2022. 38%. If T bills are still where they are now, it's all going there or into USFR. a repeat of 2021-22 when TIPS and fixed rate bonds had deeply negative real rates) then you would rather have more i-bonds than less. Then 2 other bonds purchased in October 2022 with rates of 6. 27% interest rate. But by how much?” attempting to forecast the potential new fixed rate for the U. However, when you buy a bond, you lock in the "current" rate for the first 6 months of ownership, and then your rate will update every 6 months. Well, the following year, that new car could still cost $40,000, effectively bringing the rate of inflation down to 0%. But there is no formula for determining that, so no guarantees at this point. The problem is the fixed rate for ibonds bought from May 2020 thru October 2022 was zero, and that zero fixed rate stays that way until the bonds are sold or mature. If rates and inflation continue to go up then the I Bond rates will continue to go up. I believe there will be 1 more rate hike this year and possibly 1 more in early 2024 before the Fed pauses and then begins reducing the federal funds rate down to the ~2. 15%. 3% would arguably be a better investment than the ones I'm holding with a fixed rate of 0, I'd recoup the loss of interest in less than a year, and then enjoy the new fixed rate for the life of the bond. 89% As most of us know the next rate looks like it will be in the 6. More posts you may like r/ValueInvesting. Even if the inflation rate goes up on May 1, you'll get 6 months of that rate starting after the initial 6 month rate ends if you were to buy today Edit: Typo 955 votes, 294 comments. So an I-Bond bought today will get 5. 27, 2023, I posted a prediction on the I Bond’s Nov. Which might mean the ibond rates goes lower to around 7% , right? Or can the ibond rate go above 10% in Nov and then in may 23, the rates go way down? What's not mentioned is that the fixed rate is attached to the I-Bond for the life of it. 51% 12-month treasury rate (September 1, 2022). Our bonds either already are or will soon have (<6 months) the 2. 6% rate for the first six months and the new rate, more than likely about 6. 9 - 7. g. 4% for current ibonds, it was 0. Dave says: October 11, 2024 at 2:49 pm. Reddit's hub for advice, articles, and New inflation numbers were just announced at BLS. 35% are 6 month returns right not the rate for the year. The current fixed rate is 0% and the variable rate is 9. Using the official 2) Series EE Bonds: Don't be fooled by the low 'rate' on them - the key is that they double in value after 20 years, which is the equivalent of a 3. And suppose I wanted to sell my bond. Does anyone have any thoughts about whether the ibond fixed rate will go up or down in the next six month term, or subsequent one? I want to hold ibonds over the long term, but I also want I noticed that bonds now have a fixed rate of 1. 25%). A new rate will be set every six months based on this bond's fixed rate (0. The original and largest Tesla community on Reddit! An unofficial forum of owners and enthusiasts. 6 Month Inflation Rate Return for I-Bonds Purchased or Rate-Refreshed on or after Nov 1 : 3. The biggest community on Reddit related to bonds. The current rate of a I bond is a combination of a fixed rate and an inflation rate. March 2024 CPI-U was The last two months of the year from Nov-Dec they will have the Nov 2022 rate. The Series I bond has a composite rate comprised of a fixed rate (which is locked for the life of your bond) and an inflation rate that's adjusted twice a year. So look at your bonds, and note the fixed rate. The combined rate can go down to zero, but is not allowed to go less than zero. 28% for the first 6 months. The variable rate would fall 0. There’s a positive equity risk premium at all times. 0% last time, and has varied under 1% for most of the last 10 years). 30% fixed rate when interest rates are assigned next, or is the fixed % ONLY for bonds purchased during the time When inflation is lower, a higher fixed rated (or locked in rate) component can still draw in investments in i-bonds and compensate for the naturally lower number of investments during Both the fixed and variable rates are expected to drop at the November 1st reset. The current fixed rate is 0%, while the variable rate is 7. 12% for 6 months. In the history of the Series I Savings Bond, there has never been a time where the fixed rate has been anything but 0. 5% bond, so the 1% bond drops in value such that it yields 2. Wait to see how inflation does til april. 5% annual return. Reply reply Reddit's home for tax geeks and taxpayers! News, discussion, policy, and law relating to any tax - U. 47%, per comment below) (This is the number to compare to rates of return on other savings vehicles or investments) To get the value of the bond, you would take the initial investment, multiply it by 1 plus half of the annual interest rate (since it compounds every 6 months), and multiply again by 1 plus half of the next annual interest rate. Do other types of bonds have either better historical or expected rates of return? Future Rate Prediction: What Rates will be Announced in the Future? (Last Updated: Nov 4, 2024) Any speculation or conjecture should be taken with a grain of salt, and is NOT investment advice. The right answer may depends on your situation, but I bonds can serve both as emergency funds and long-term bonds, without the risks of long-term bonds (e. 27% for the next six months cnbc. I bonds earn interest until the first of these events: You cash in the bond or the bond reaches 30 years old. Going to sell my 2021 and 2022 i bonds 3 months into the next interest rate reset (so i can keep the full 6. inflation run higher than 9. 5% in 2023. It’s way simpler for the Get app Get the Reddit app Log In Log in to Reddit. 62%, buying an I bond in September gets roughly 6. 5%. Does anyone have an educated projection of the I-bonds interest rate for the second half of 2023? Would love to hear your reasoning, especially with regard to your prediction of the inflation. Initially this thread was about an update on I Bond's rate in May and was titled "I Bonds variable rate @ 3. 6% would get added to whatever the dynamic CPI-U inflation rate is on a monthly basis. Predicting that 10 year bonds will go up 6-8% is an attempt to beat the bond market, as the price of the 10-year bonds is an expression of what the market expects the path of rates to be over the next 10 years. Short term rates are eventually expected to go down per fed forecast but buying these bonds now guarantees this fixed rate PLUS inflation. After six months all the bonds switch over to the new rate. The fixed rate can be reduced in the combined rate if the inflation rate is negative. So the current I Bond variable rate always reflects 6 months of prior inflation. EE bonds are best when cashed in after 20 years, but I bonds will track inflation as long as you want (1 to 30 years). 62%, and yet AT NO TIME did annual U. 3% fixed rate ABOVE Inflation, does it make sense to buy ibonds in 2024 (maybe to have a chunk of your emergency fund or an additional one What interest rate is realistic by the end of the year and what about the end of 2024 does anyone think 6. inflation is a straightforward discussion (if there's anything to even discuss, that is). 35% + inflation instead of 0% + inflation. Let’s say the fixed rate rises to 1% and they want the combined rate to stay the same. Current value of these bonds is $12. Now, given current HYSA rates, you'll most likely come out ahead with I-bonds, even with the 3-month penalty, but it's not guaranteed. So this year your rate would be 7. 3 = 5. The fixed rate looks likely to hold at around 0. then apply this formula from Treasury Direct: Composite rate= [Fixed rate+(2 * Semiannual inflation rate)+(Fixed rate * Semiannual inflation rate)] Your fixed rate never changes. 0962 / 2) x (1 + . The fixed interest rate has been going up on these bonds and is now positive (0. Whether you buy in January 2022 or April 2022 the value of the I-bond will be the same over the same time period. At an initial rate of 9. Yikes. I bought $150k of them in 2021 and $100k more in 2022. 301, for a semi-annual inflation rate of 0. If it’s actually the Posted by u/shreerang7 - No votes and 3 comments Do you think the fixed rate will be higher or lower for I Bonds purchased in May? Seems to me that the fixed rate from November '23 was to compensate for a lower variable rate, in order to encourage investment in an environment where there are numerous options to get >5% on your cash. 1 reset, showing that the 10-year real yield had averaged 1. Plus if yields do go up, you can cash them out early, and invest in higher-yielding bonds. 95%. 28% for the current crop. This 0. The term "fixed rate" has a certain meaning with I bonds. 30% for six months. You’re locked into the current fixed rate when you purchase. You get the 7. They can set short rates, buy long bonds to crater long rates,they can buy MBS (they’re currently the largest single holder of both US sovereign debt and Mortgages) they can buy municipal debt, corporate debt and even equities. This means the higher the I-bond rate the higher the future stock market returns. 836, for a semi-annual increase of 1. Tipswatch was predicting over 1%, so I held off. 76x0. We plan on sitting on it until the APY drops much lower than High Yield Savings rates and pull our money out (losing the last 3 months interest) after. Since most bonds are bought with real money and traded in game for GP, it makes sense that when real world markets drop, less people have money to spend on bonds, thereby decreasing its price. savings-account interest rate. 94%. 6% interest and you have other savings in a high yield savings account earning 4. The variable rate will probably fall to a range of about 3. Which one is better depends on what rates do over the life of the bond. Is it a good strategy to buy and hold I-bonds long term as a means of wealth preservation and to hedge against inflation and stock market volatility? EDIT: I believe the average historical inflation rate has been 3. 39%. Take the sure thing and buy now Reply reply Keep in mind the new rate is 4. For example, if you purchase $10k today, it will grow to $10,856. As the interest rates were going up, most people were laddering with weekly 4-8 week T Bills ; a major thrust of the approach was to keep with shorter term bills for now to catch the next interest rate increase, but to also keep an eye out on the Note that while the Treasury will announce these new rates on Nov. com. 30% plus an inflation rate. Reddit iOS Reddit Android Reddit Premium About Reddit Advertise Blog Careers Press. The rate is likely to go up May 1 but unlike stocks or regular bonds it’s somewhat predictable. I'm currently thinking buy in April. Do we know what the I bonds rate will be November 1st, 2023? Need to build my emergency fund back up. true. 85%. 5 or 7 percent interest rates could happen and be held for some time? and both of their predictions seem to have a short shelf life, shifting month to month. Buy $10k in spouse name, buy $10k in each kids name, buy $10k in gifts for future year for each of them, they issue instantly and can be gifted to yourself (via other accounts) at 1 year. I have 1 bond with an issue date of 04/01/22 that currently says it has a 6. 12% rate for six months (until end of June). 4% is too lagging to base the I bonds rate on. As a quick and dirty comparison, Update: Savings I Bonds bought from May 1, 2024 through October 31, 2024 will have a fixed rate of 1. Bonds purchased November 2022 through April 2023 have a 0. The disadvantage of bond funds is you can't forecast their cash flow with the same accuracy as holding individual bonds. When we compare the 6-month composite rates against 12-month treasuries at the time we see that the 6-month I bond rate is an average of 0. Don't post questions related to that here, please. 62%) in 'Rates' tab C50 cell. The 6. rates going up and bond value going down). Longer bonds carry more short term risk. So I bought a ibonds a few times last year but the current rates on my account are a bit confusing. Over 1 year ago, people were bonkers over T Bill Rates (yes I know the market returned ~15-20%, but it all came in the last 2 months). I bonds earn a combined rate of interest. 5% mark around 2026/2027. 20%. As I've seen some contradicting information. September 2023 CPI-U was 307. 78% from May to Oct. The RBA did nothing. Some analysts say by 2023 the fed will lower rates as inflation gets under control. 4% fixed rate will apply for bonds purchased between November 1, 2022 and April 30, 2023. 24% Annualized Inflation Rate Return for I-Bonds Purchased or Rate-Refreshed on or after Nov 1 : 6. 0194. If I bonds give 7-8%, then the stock market is going to give 12-13%. Don’t buy for 2023 yet. 25% at year-end, with another hike to a peak of 4. At this point, wouldn’t all of the treasury rates fall significantly from their current highs? "Yield to maturity is the total rate of return earned when a bond makes all interest payments and repays the original principal. 2% to 3. 9% fixed rate will attach only to bonds purchased between May 2023 and October 2023. March 2024 CPI-U was 312. 4% fixed rate, which will apply for the life of bonds purchased between now (November 2022) and May 2023. The rate can go down. The variable rate changes every 6 months. or 2000. 48% Then I have another bond with an issue date of 05/01/22 that says its rate is currently 3. May 1st fixed rate predictions won’t make much of a difference. They're on the sidelines now. Series I Savings Bond on May 1. Curious about the upcoming I Bond inflation rate in November 2023? Look no further! Whether you're a seasoned investor or new to the world of I Bonds, this v Variable rate is projected to fall as the fixed rate rises. gov is 3. We are entering a generational change in fixed-income investing where you can actually earn real income while minimizing risk. 1, the month the new rate will begin for you is based on the month your I bond was issued. Yes, but only for bonds bought during the period that the 0. a fixed rate; a With the 1. Value investing in all its forms - From Graham & Dodd, to Buffett & Munger, to their philosophical descendants today The biggest community on No that’s not accurate, a zero coupon bonds yield to maturity rises as the term to maturity declines. 90% fixed rate of return On Oct. If you’d need to put an expense on a credit card where you’d owe 28% interest, then definitely sell the bonds to avoid the debt. the I-Bond purchased in January 2022 will be worth the EXACT same in January 2028 as the April 2022 I-Bond will be in April 2028 (72 months later in this example, but applies to any number months later). Fixed rate You know the fixed rate of interest that you will get for your bond when you buy the bond. com "We are going to get a reset on both the fixed and variable rates for the U. 5%, you get that + the "inflation" rate announced every six months. 98% rate, but any bonds purchased now will have 2. So your 6 month period on your bonds won't necessarily be in step with the treasury updates (you may lag behind by up to 5 months). Sort by: Best. They are called "Fixed Income" for a reason. 97%. If we issued your bond in Your interest rate changes every The September – October 2022 I Bonds current rate of 9. That fixed rate does not change during the life of the bond. 6% that remains static as long as you hold those I Bonds so the 3. You have to think about what the 'neutral rate' is. Or check it out in the app stores And even if there were a fixed rate in the next period, the I-Bond fixed rate hasn't gone higher than . If the fixed rate goes up in May, I would then probably redeem some of my 0% fixed rate I bonds and buy new ones as gifts to capture that higher fixed rate. if you buy right now the fixed rate stays the same for the life of the bond, the variable rate changes every 6 months to the current variable rate. I'll be buying some gifts, and may even sell off some more 0% fixed I bonds to add to them. 62*2) for March. 6% to compensate and so you’re rate would be smaller. If we look at rates historically, fixed rates are generally higher than variable, but bond rates are leading indicators. 9% fixed rate, the breakeven is about 12 months, not counting taxes and assuming you lose the 3 months of lowest interest. The interest rate on a Series I savings bond changes every 6 months, based on inflation. That fixed rate then applies to all I New Series I Savings Bond rates released: 1. The biggest community on Reddit You can go by history if you want. Let’s plug these numbers into the formula I mentioned a minute go: Total Rate = Fixed Rate + 2 x Semiannual Inflation Rate + (Semiannual Inflation Rate x Fixed Rate) Total Rate = 0. The IRS is If you're thinking about cashing the 0 fixed rate bonds in and buying in at the current 0. The thing is expected returns and I-bond yields aren’t independent variables. The bond yield and coupon rates for the 15++ different Treasury Bonds held by the RBA and RBA If your bonds are earning 6. 25% (0+1. Should I sell the 3. This is an Excel calculator showing how your i-bond grew/grows over time. You can then compare this against a May 2024 purchase. Thank you. Use this table to understand when each new rate begins to apply to your I bond. There is an important point which I think people are missing. Composite rate -- a combination of the fixed rate and inflation/variable rate that your bond actually earns for a 6 month period. 4% is the last 12 months, I bonds looks at a 6 month period of inflation and annualized the rate so by looking at the last 12 months you’re not only going back to the 6. I should sell the 2018 bonds and rebuy as 2023 bonds, right? Inflation/variable rate -- the part of the rate that does change to reflect inflation. I understand just about everything there is about I-Bonds, but I have questions regarding its interest calculation that I’m seeing. As you know, the coupon is 3. 7% and CDs around 2%. I bonds’ rates have since dipped from their headline-grabbing heights—they were as high as 9. 535%. 62% for the first six months, while if I purchased bonds last year when the fixed rate was 0% I'd only get 7. All I bonds have a fixed rate. 11% for the first 6 months. Jan 2023 - June 2023: Current 6. 4% fixed rate. They also have a fixed rate of 1. 808. 62%. If rates stay the same, you will see the fund slowly "go up" as bonds mature and the YTM approaches the rate of newly issued bonds and new bonds are acquired. 62% rate. 3%, which is higher than it has been for a while. Your bond rate = your specific fixed rate (based on purchase month, look it up here) + variable rate (total bond rate has a minimum floor of 0%). 53%, a 10 year to maturity EE bond yields 7. September 2024 CPI-U was 315. Treasury announces the fixed rate for I bonds every six months (on the first business day in May and on the first business day in November). Because we're in a period of falling inflation, this is a good thing. The penalty at 3. 25% to 4. 0% when the inflation rate was > 2. 1% over the last two years. I'm curious about others opinions on what 2024 is going to look like with T-Bills. At that point, if the fixed rate is looking good I will buy new ones. 94% & 4. The rate is announced at the start of May and November and is used for I bonds issued during the following 6 months. Are there really people/institutions out there holding 7 more years of bonds paying that little, or would they take their lumps and bail?. 62 percent. But you can manually add "4. Since then, it has taken on a life of its own. So if they announce on May 1 that the next rate is 7. 3% only for new i bonds because it includes the fixed rate of 0. Log In / Sign Up; Advertise on Reddit; Shop Collectible Avatars; Get the Reddit app Scan this QR code to download the app now. If the 6 month inflation rate drops to 1% at the may 01 reset and they keep the 0. You enter the purchase date and $ amount in "OneBond" tab. 0648 / 2) would get pretty close to the value of the bond after 1 year. Note the 2nd point there re: defending the bond rate. 5% by end of 2022, and around 3% through most of 2023. 12% rate. New inflation rate prediction. 5% in the past 16 years. 89% rate data, but you’re also catching 3 months of the 9. 013 + 2 x 0. The discussions will focus on fixed-income products such as Treasury bills, notes, and bonds; certificates of I Bonds have a fixed rate and a variable rate. If one committed to iBond it is meant for long term not to time max inflation and get out with penalty. 12%! Why should I own I-Bonds? If I buy 10k on January 1st and on that day the new inflation rate or annual return is 10% and then say 6 months later the new inflation rate or annual return remains at 10% and I redeem that I Bond on January 2nd (or would it be January 1st?) the following year then I have earned in interest $1,000. I Bonds could pay more than 6. So Dec 2021 bonds switch over in June 2022 (the new rate from May), April 2022 bonds switch over in October 2022 (and begin the rate announced back on May 1st 2022). Or do you think you have a better prediction about future bond rates than the aggregate of all other market participants? Reply reply Top 1% Rank by size . 3% better than the ones we own from 2020 even as they both go through the same variable rates that change As the others have said it's based on inflation, and a fixed rate (fixed is 0. 8 I posted an article, “The I Bond’s fixed rate will rise. 3% plus whatever the variable rate is for the next 30 years. 48% (edited from 6. The current highest savings account rates are 0. " Source Now if we get a improved fixed rate maybe there is a long term discussion to be had, but right now I don't think there is a short term one. March 2023 CPI-U was 301. " An I-Bond consists of a fixed rate (fixed for the life of the bond, which has a 30 year maturity), and a variable rate, which is based on the government CPI index, and resets every 6 months to the current inflation rate (May and November). Bonds purchased Saturday, Sunday, and Monday will be issued in November, and will have the rate announced by Treasury on Nov. They're also tax I Bonds are savings bonds issued by the federal government with a variable interest rate that changes every 6 months, depending on the current inflation rate (there is also a fixed portion of the rate that's tied to the federal reserve key interest rates. 90 percent). treasurydirect. If it is 0%, you will only get the 2 * semiannual rate. 28% rate. Based on a CIBC Capital Markets sourcing Bloomberg and CIBC, the market is pricing in 2. Then on Oct 29, the bond market spiked to a 2-year rate of 0. If the rate is going to go up or down in May, you probably know in April roughly what the rate will be. 3% fixed rate, 5. I think they are referring to if the fixed rate portion goes up, to sell the bonds and rebuy to get that higher rate. Nothing to disagree here. That decade of low rates was not normal and is unlikely to return in the next decade. Was hoping somebody could confirm my calculation of the correct timing to redeem my bonds. So if the variable rate now is 3. From the sounds of it, you get paid out semiannually. PS: 4. So if you buy 10k in year 0, in year 20 10k Buying a fund with a dividend yield that is less than the YTM just means that the average yield of the bonds is less than the yield of newly issued bonds of the same duration. Any predictions for BOE At this point, I would be finding I bonds attractive if a future rate includes a substantial fixed-rate component. 5%, for the following six months, Barron’s estimates The rate for Series I bonds is reset every six months based on the CPI-U (although even if the CPI-U drops below zero due to deflation, the I-bonds will never lose value). If rates go up, you get a better return with the floating rate. The fixed rate stays the same for the life of an I bond. If inflation gets out of hand and but real rates come down or go negative (i. If you buy a that has a fixed rate of 0. 065% for the year. Given that interest on I bonds compounds semiannually and I'll lose the last 3 months interest for early redemption, if I cash out the bonds on January 01, 2024 I'll have earned 4. 4%) if you buy an I-Bond before the end of this April. EE bonds in particular aren't meant to be cashed out before 20 years. My original plan was to buy in October to get 0. 27% rate, which is better than your Ally Savings rate. 4% fixed rate applies (Nov 22 - Apr 23). Includes a 6. org. The variable rate is adjusted for inflation. Even turning around and immediately buying another I bond with a fixed rate of 1. 3%, versus my current bonds which have a fixed rate of 0%. Will it be possible in October 2022 to know what the rate announced in November 2022 will be? That way, I would essentially know what my interest rate over the next 12 months would be. If I buy a 30 year bond at 1%, and a few months later another 30 year bond from the same issuer and terms is available at 2. My mid case would be that the next three months of inflation are roughly average to what we have seen since March’19 (as far You get the fixed rate on top of the "inflation" rate for as long as you own the bond. gov, which allows us to make an early prediction of the May 2024 savings bond rates a couple of weeks before the official announcement on the 1st. So I’m maxing I-bonds now before May because who knows what could happen 6 months Bond prices can be analyzed to calculate what the market has priced in for upcoming Overnight Rates. A fixed rate portion and the adjustable inflation rate portion. 17%, a 9 year to maturity bond yields 8%. If rates are going to drop, I Bonds aren't the things going to be hit - it's going to be the savings account rate you traded them in for (which yielded under 1% for most of the last two decades). 54% in May". If Hi everyone! I'm new to bonds and I'm having some trouble wrapping my head around the interest payments of I Series Bonds. Series I Savings Bond, which will be reset The I Bond variable rate is set based on six-month periods of inflation — April to September, and October to March. Things do change including bond future interest By David Enna, Tipswatch. Would I-Bond still be a good place to park some money in? We bought an I-Bond in Sep 2022 ($10K x2) and are planning to get one in Jan 2023 ($10K x2). 332. 2% range. Right now the rates can reach 4% for 3-5yr cds. So I would have this rate from 4/1/2022 through 10/1/2022 before the rate updates to 9. E. That rate may still look attractive, but I You can sell them and then use the money to buy a new one. 27% for the next 6 months because 3. 0148 x 0. 3% over their 30 year lifetime no matter what the variable rate does, and will do 1. 013) Sure, the bonds purchased between now and April first will have a fixed rate of 1. 26, 2023. All indicators point towards another 6-month cycle with a relatively high inflation rate. 00 percent) and on inflation. Projected i-bond rate for May 2023? One year - higher than currently (fixed rates in the 7-8% range) Two years - slightly higher than currently (fixed rates in the high 6% range) Three years - rates begin to fall slowly, but not back to Covid levels, likely stabilize around 4-5% You have to realize that interest rates have been artificially low since 2008. Or the price could actually decrease resulting in deflation. So they make 1. 6%, these will pay 10. If you want the actual calculation of this, it is fixed rate + 2 x inflation rate + fixed rate x inflation rate. I will cash out my I bonds that have a fixed-rate component of 0% as soon as their adjustable rate drops to a small amount for three months. Can you tell us where in the fixed income universe you can find a AAA rated bond with a 4%, 5%, 6%, 8% yield to maturity? Nice to see the higher fixed rate. 4%. S. 4%, I think, or just a bit higher. gov, which allows us to make an early prediction of the May 2023 savings bond rates a couple of weeks before the official announcement on the 1st. Share Add a Comment. Inflation has come down some, so it is very likely that the I-bond rate to decrease in May. I Bonds purchased from May through October 2023 will pay an inflation-adjusted annual rate of 3. The fixed rate of I-Bonds stays with the bond forever. Yes, but since 1998, there have only been two six-month periods where the inflation rate was so low that the I-Bond's variable rate dropped to zero: May 1, 2015 and May 1, 2009. 1% more compared to the 3. But think about this. Now the new variable rate Once a fixed rate is attached to a bond it continues for the 30 year life of the bond. 12% until June 30, and then on July 1 your rate would reset to the rate announced in May. I Bonds purchased this week will have the 9. Interest rate changes depend on when we issued the bond Although we announce the new rates in May and November, the date when the rate changes for your bond is every 6 months from the issue date of your bond. Just remember, I-bond interest rates are quoted as annualized rates, but the variable component changes so in reality you only get half the variable rate for the 6months. Suppose I get a $1000 bond that pays a 5% coupon rate, and the day after I get that bond the government starts offering the same bond, except with a 10% coupon rate. Even if the inflation rate is negative, the I-Bond rate can't drop below zero, which is nice! 20 Responses to Forecast: The next I Bond fixed rate should be 1. Currently the fixed rate portion is 0%. 5% historically) and EE bonds if held 20 years the same (3. 38%, and when combined with a fixed rate of 0. Your i bonds will drop to 3. So let's say you buy on Jan 1. 3% - which is better than the 0% fixed rate that your current I-Bonds have. The Federal reserve is trying to find the new normal for rates, and there are a lot of convincing arguments that it won't be going back down to 2-3% at all. I'm afraid the rates are going to go down, and I'm debating on whether I should start reinvesting my T-Bills in longer term T-Bills. If you do, you'll only received the fixed rate, not the doubling rate, which right now is 0. Bonds only lose money if you sell before maturity. How did people know in April 2022 what the rate announced in May 2022 would be? From what I can tell, the official rate is not announced until May 2, 2022. endlessoatmeal • Looks like the variable rate will be 3. The alternatives of using long term treasury bills and long term CDs is suboptimal I think because Ibonds are guaranteed to meet inflation (say 2. 25% interest rate for high-yield savings accounts (Ally is currently at 2. The prediction of the November 2022 rate is using the power trendline formula 286. Look at the average coupon yield of the fund to get a better forecast The inflation rate can technically go negative (if there is deflation, like in May 2009), but they don't let the composite rate go below zero. 5% and 3-year rate of 1. 30% composite rate for I bonds issued from May 2023 through October 2023 applies for the first six months after the issue date. 94% I Bonds and get the newer rate or should I just buy another 10k of new money? 3. A conversation on short-term interest rates v. I'm also thinking about possibly investing in a longer term Bond (10 year) to lock in a decent rate. It really depends. 97 + 1. The ones being sold now have a 5. If you need to close before maturity you can sell them on a secondary market like a bond can be sold you can Help this number geek out. There are 2 rates a year, everyone gets that rate for 6 months, just when your rate changes depends on when you bought it, but if you are holding I Bonds today you will get 7. 31% lower. " 30 days is not to maturity. You can get a good estimate what your 12-month return will The annual limitation on purchases of United States Savings Bonds will be set at $5,000 per Social Security Number, effective January. 48%. 00 in 12 months (before It was too early to tell before and it is still too early to tell, but that 6. The current fixed rate component is 1. They are FDIC insured. e. 4% Woah, thank you for this great financial lesson there. 5% interest, then probably best to use the HYSA money before touching the bonds. So if I wanted to sell my bond, I'd have The return in a bond will be locked in at that rate until maturity whereas in a savings account or money market fund the rate will float. 68% now which beats a HYSA. Both the permanent fixed rate and inflation rate will be reset again on November 1, 2023. 789. CD rates predictions for the next year? Right now the rates can reach 4% for 3-5yr cds. 48% inflation component, which will apply to all bonds for 6 months, and a 0. If that sounds low to you, check out what 20-year Treasuries are yielding. The only concern with these types of bonds are that the rate has gone The biggest community on Reddit related to bonds. r/ValueInvesting. 1—next Tuesday, according to the website. The last variable rate was 9. That said, Your Treasury Direct will try to aggregate and share early indicators or rumors here. The composite rate combines a 0. The rate can go up. I Bonds bought now honestly may not end up better than 4-5% APY, with significant opportunity cost given the depressed equity market and the current interest rate on new bond issues. the interest on I bonds is a combination of. Once a bond has a fixed rate it will carry that fixed rate for the 30 year life of the bond regardless of any changes in the inflation rate or fixed rates for other periods. 27% combined rate. 62% in May of 2022—to 4. 1%. The author didn't update the next 9. For I-Bonds, it's use it or lose it space that you can use to accumulate inflation-protected, tax-advantaged cash. So, a better investment today would be 5-year TIPS, where you can get 1. I-bonds reprice every 6 months, so it'll be for 6 months, then you get whatever the next rate is For the first six months you own it, the Series I bond we sell from May 2022 through October 2022 earns interest at an annual rate of 9. The one benefit of savings bonds for the The interest rate on I bonds changes every six months, and with the latest inflation reading now released, we can calculate what the next rate will be on existing I bonds. At that point, they lost control of the TV remote. 98+1. If we ever get into a deflationary environment (seems unlikely now but it's possible one day) another benefit is that they are guaranteed to never go below 0% rate. Interest is compounded semiannually, meaning that every 6 months we apply the bond’s interest rate to a new principal value. 81%. I bought the personal max of $10k in 2018 I-bonds, with the latest bonds being issued 07/2018. 38% for May, you'll actually get 3. 9% making the composite rate 4. This is the continuation of the "Golden Period" thread started on 6/18/22 on ER. 9%. Edit: There will be more data in April, you can buy in April and the rate will be locked for 6 months on the bonds you buy. 0148 + (0. 5% interest) and I expect low interest rates going forward due to government debt (they need inflation and low interest rates to keep low government debt). There is no big loss investing now vs in a week, as you’ll eventually get the May variable rates in October when your bond resets plus the 1. Even though the I-bond rates are reset in November and May, buying in at any time will give you the current rate for six months, then the next rate for six months, etc. 5% decline in rates in 2024 If Canada matches, we would be in the high 5s low 6s for prime rate by the end of the year. Does bond only care about the rates in the short-term? 30 year mortgage rates have gone from 2. Meanwhile, Series I Bond composite rates right now are 5. On May 1 (and Nov 1) each year, the Fed sets I bond rates. See r/TeslaLounge for relaxed posting, and user experiences! 3 years ago the 10 yr bond rate bottomed at 0. But where the market for bonds drops in March 2020, the S&P dropped huge. The fixed rate begins at the start of bond when you buy it while the variable rate changes every 6 months depending on consumer price index. Someone in the market for a bond could either buy my bond that pays 5%, or a new one that pays 10%. 62% is the highest rate every offered on I bonds. Particularly as inflation has increased in recent months. So if we see another period of high inflation and I series bonds are paying 9. 9% during that period. 69%. I think your username is on to something. A 20 year EE bond yields 3. I'm aware of the way the interest is earned for I Bonds but I'm wondering what the comparison would be for doing $10K for a year (well, 15 months for the comparison so that you wouldn't lose those last 3 months of interest per the penalty) or $10K for a year at the current 2% or 2. 4% fixed component, the new rate will be 2. We are all here to earn income and preserve capital. 62%) for six months and then the published rate in November for the next six months starting in April. If you applied a ratio of If you buy I Bonds in October, you will be paid the current interest rate (9. Open Right now I-Bonds purchased between October 2023 and April 2024 will have a fixed rate of 1. Edit for clarity: The 0. 4%, even if inflation comes in as expected: The rate on I Bonds includes a fixed rate for the 30 I bonds have 2 parts of the rate: A fixed rate that never changes once purchased A variable, inflation, rate that changes every 6 months after purchase. Thus, your bond's value grows both because it earns interest and because the principal value gets bigger. You get the rate today for the next 6 months and then you'd get whatever the new rate is in 6 months for the next 6 months, etc. 38% would be about $85, so a higher fixed rate would recover than in just over 2 years. Update: Savings I Bonds bought from November 1, 2024 through April 30, 2025 will have a fixed rate of 1. com Open. As you can see below, only people with If you're looking for the next I Bond rate look no further! With 5 months out of 6 months needed we can begin to see a trend of which way the I Bond inflatio so it's not really much of a future prediction. From 10/1/2022 through 4/1/2023 I would have the 9. An age old financial instrument for lenders to create fixed income, and for borrowers to acquire the capital they need to satisy their desires. September 2022 CPI-U was 296. Previously purchased bonds will update their rates based on Even at a lower interest rate, I Bonds are likely to offer a yield that is at least 2 percentage points higher than a 30-year U. 3% for new I bonds, but if you acquired yours when the fixed rate was 0%, you’ll only be getting 3. 20%, for a total rate of 3. 12%. 5% with the 5 You are limited as to how much in I-bonds you can buy per year. It said they expect the median forecast of Fed officials to show the funds rate at 4% to 4. The IRS is experiencing significant and extended delays in processing - everything. Inflation seems that will take some time to lower. Rates on I-Bonds change every 6 months, and HYSA can change at any time. If you buy bonds with a fixed rate, then you get the fixed rate for the entire life of the bond on top of the variable rate. There are two parts to ibond interest - the fixed rate and variable rate. 65 * average 5-year real yield) may no longer hold. When the bond market dropped in January 2022, the S&P dropped huge. Prediction from https://tipswatch. $10,000 x (1 + . So right now the variable rate for all I-Bonds is 3. (if you want high I-Bond rates) would be no more inflation for the next three months, and if that happens, I project the I-bond rate to be 3. Some predictions that the fixed rate for new purchases could be 1-1. I bought a $10K bond on 12/22/2021 at a 7. The bond price changes when the actual rates deviate from the expected rates path. I purchased the 5 year treasury at action on September 25, 2024. The reduction from the $30,000 annual limit in effect for both series since 2003 was made to refocus the savings bond program on its original purpose of making these non-marketable Treasury securities available to individuals with relatively The fixed rates only apply to the time period when they are in effect. 4k and the displayed interest rate of these bonds on treasurydirect. I Bonds will probably only be attractive for the next 3-6 months. May as well just leave it in a savings account in that case. Expand user menu Open settings menu. And given the dollars entrenched standing the fed can get away with a whole bunch of stuff before people seriously start to lose faith. Like you, I am also planning to sell after 3 months of the reduced rate. 78% as your fixed rate attached is added (0. 5% to 8% - so no? Why also long term bonds are affected so much by short term changes despite the average rate projected in the next N years does not change much? I'd argue with a couple of your arguments. 00 (I'm confused on the interest is compounded semiannually part) minus the 3 The federal funds rate is (in my opinion) nearly peaked. Current I-Bonds issued today have a 5. 3% - which is the highest the fixed rate has been since 2007. For example, if you bought I Bonds between 5/1/2000 and 10/31/2000 they had a fixed rate of 3. I will definitely be dumping my i-bonds after 3 months of the new rate. Any bonds purchased now will keep the 1. I'm thinking about doing that or expanding my t bill ladder but waiting until fall to have some medium term view on inflation and rates. 37% so nearly a percent higher than what you have instead. 5% that they’re currently earning and the 3 months of interest that I forfeit will be next to nothing since inflation is down heavily) Fed rate monitor is predicting a 1%-1. 81%" (half of 9. 30=4. Some of us pay attention and know how to buy as many ibonds as we want. Most people would think that rate would be sticky and continue for some time. 27. 5%, down dramatically from the current 6. 5%, naturally, investors would rather have the 2. Does the bond I bought back in 2022 get the 1. Members Online • [deleted] ADMIN MOD Treasury Department announces new Series I bond rate of 5. Buy now or wait? Between those two options, I would buy in October as you’ll likely get a They do, people who are suggesting to wait until November do not understand how I Bonds work. EE Bonds have a fixed rate and no variable rate; however, EE Bonds are guaranteed to double after 20 years. Back on Oct. and International, Federal, State, or local. 30%, for a total composite rate of 4. The variable rate change every 6mo, so yes your bonds’ rates are changing over time with whatever the variable rate is. If the May I-Bond has its own fixed rate, that doesn't get added to my understanding. Let's just say for the sake of keeping things simple, I put in $1k and the bond rate is at 10%. 9%, creates an annualized composite rate of 4. It’s likely they wont be a good investment in 2023. Treasury bond and more than 40 times the average U. ngah rbrdy otnac izca kfzkm jgjpd ndcrs hweiy qwdli shwul